Hoa Cong works on a machine that puts DVDs into envelopes at the Netflix distribution center in the Humble area.

Even though it processes 65,000 products a day intended for viewing, it's not easy to get a look at the Netflix distribution center for Houston. But Netflix recently offered a rare glimpse inside the Humble-area facility where it processes DVDs for mailing to subscribers in the area. Nondescript on the outside and bare bones inside, the facility nonetheless boasts high-tech machines that, for example, can sort 17,000 envelopes by ZIP code per hour.

Netflix's ability to deliver a DVD quickly is key to its phenomenal success, one analyst said.

Netflix dominates the DVD-by-mail market and is establishing its presence in the growing streaming market that lets consumers choose movies instantly to watch online.

Beginning at 3 a.m., scores of Netflix employees at the Houston-area warehouse open the day's mail, pulling thousands of DVDs from their envelopes, company spokesman Steve Swasey said.

Much of the processing is automated. A high-speed sorting machine reads the bar code on each DVD sleeve, electronically cataloging the movie title and person who returned it.

When the DVD goes through the machine a second time, the sleeve is scanned to see if there is an order for it on that day or not.

An automated stuffer puts the DVDs in red Netflix envelopes and seals them.

When envelopes go through the sorting machine, the shipping address is printed on each envelope, which then is sorted by ZIP code.

As each DVD goes through the sorter, its recipient receives an e-mail saying when the disc should arrive.

Netflix has 58 distribution centers, four of which are in Texas.

Lately, some Houston Netflix subscribers have been getting return envelopes with a San Antonio address, but that doesn't slow the delivery process, Swasey said.

When Houston postal carriers pick up Netflix envelopes they drop them off at a local post office and they stay there — even those with a San Antonio address — until a Netflix employee picks them up and delivers them to the Houston distribution center, Swasey said.

Other companies, including Wal-Mart and Blockbuster, have entered the field but so far have not mounted much of a challenge, he said.

The key to the success of Netflix is offering both convenience and value, Wold said.

Netflix subscriptions start at $4.99 per month. For subscriptions starting at $8.99 per month, customers can rent DVDs and have unlimited streaming.

“When we want a movie, it's typically there and available, and it comes pretty darn quick,” said local attorney Stuart Miller who has been a Netflix subscriber for about three years.

“It's a great idea, great product,” but lately, said Miller, the father of a 5-month-old and a 3-year-old, “the trick is finding the time to watch the movie.”

While Netflix has a firm hold on the DVD mailing market, the streaming market is wide open. Big players including Apple and Amazon are competing.

As the streaming market grows, DVD-by-mail will continue to appeal to consumers because it is typically cheaper, Wold said. DVDs will be around for another 15 to 20 years, he believes.

Netflix has more than 100,000 DVD titles. Last year the company offered more than 17,000 titles available for streaming and that number has grown, Swasey said.

Netflix targets older movie releases, while much of its competition, including Blockbuster and Redbox, focus more on new releases, Wold noted.

Founded in 1997, Netflix, based in Los Gatos, Calif., has grown dramatically. By the end of last year, it had 12.3 million subscribers and it posted $1.6 billion in 2009 sales.

Netflix founder and CEO Reed Hasting got the idea to create Netflix after being charged $40 in late fees by Blockbuster when he turned in Apollo 13 after its due date, according to MarketWatch.

The viewing tastes of Netflix subscribers differ from those of movie ticket buyers. Many box office hits owe much of their success to major advertising, Swasey said, whereas a movie is popular in the Netflix network based on user ratings.

Netflix's all-time most rented DVDs are, in descending order: Crash, The Departed, The Bucket List, The Curious Case of Benjamin Button and The Pursuit of Happiness.